Labour Party proposes raising UK Digital Services Tax (so Amazon can pass the hike on that, too?)

Calls for a hike in the Digital Services Tax (DST) have received a lukewarm response from British business – even among retailers that have been squeezed the most by online giants like Amazon. The proposed increase from 2 to 12 per cent was made on Monday by Shadow Chancellor Rachel Reeves as she addressed the Labour Party …

[elsergiovolador]

Ineptitude

We already have a Diverted Profit Tax that is higher than Corporation Tax and is designed to tackle avoidance by big corporations. Problem is that this tax is rather discretionary, so HMRC would need a nudge to go after Amazon. Given the family connections of current Chancellor to Amazon and Jeff Bezos, this is going to be unlikely in my opinion.

On a side note - it is funny and tragic how Labour can think that even more tax burden is going to help small business. Big corporations have an army of top class accountants and solicitors and probably have people who created the tax rules on call as well, to help them avoid paying. Small business can't afford such help.

[Dave314159ggggdffsdds]

Re: Ineptitude

Lovely. Overt neo-Nazism.

[Loyal Commenter]

Re: Ineptitude

I see you have a history of accusing all and sundry of being fascists and/or anti-Semites. Have you considered changing your user handle to "Godwin"?

[babaganoush]

Re: Ineptitude

You're right. I remember a completely absurd discussion with davenumber a while ago where I was accused of being a fascist for reasons I shall never comprehend. The guy is either completely of f his rocker or a Nazi - quite possibly both of course.

[Dave314159ggggdffsdds]

Re: Ineptitude

You literally recommend people get their views from a book about how the Jews run the world, written by a noted Holocaust denier, ffs.

[Dave314159ggggdffsdds]

Re: Ineptitude

The far right loves to pretend Godwin's law says it's _wrong_ to point out Nazism. Of course, it says no such thing. If nothing else, in any internet discussion that goes on long enough, you lot show up and get called-out.

Thanks for proving my point.

[Loyal Commenter]

Re: Ineptitude

My point is, that either you don't know what the "far right" is, or you're actually engaging in the old right-wing trick of accusing everyone else of doing exactly the thing you're doing yourself to divert criticism.

If you're wildly accusing all and sundry of being far-right anti-Semites when nobody else sees what you are seeing, then perhaps you need to get your prescription checked. That, or you bought those glasses off of John Carpenter. Are you all out of bubblegum?

[babaganoush]

Re: Ineptitude

I think I've cracked it now.

As far as I can tell in the mental universe inhabited by Davenumber, anyone who states an opinion that might be construed as being just a tiny bit to the left of, say, Ayn Rand is by definition any or all of the following: anti-semite; Holocaust denier, (neo, new or just plain) Nazi, fascist, far-right nutjob.

I hope we can all agree, no matter what our individual political preferences, that this is bollocks of the very highest order.

[Justin 9]

This will be passed on straight to the consumer

12% DST + VAT.

[Disgusted Of Tunbridge Wells]

If this was a Tory proposal, the Labour party would be calling it the "tiktok tax".

[Loyal Commenter]

I'm all for a 110% tax rate on TikTok. Anything to reduce the exposure of "influencers" who have inexplicably drawn their eyebrows on in marker pen.

[mark l 2]

More likely Amazon will just increase the fees paid by the 3rd party sellers who use the platform to sell, to cover any increase in the tax. Just like they did when it was initially introduced.

[Graham Cobb]

Yes - but that isn't a problem for this particular proposal. The proposal seems to be to eliminate/reduce rates - paid by High Street retailers - by charging a transaction-based tax on online sellers. Yes, Amazon would probably push this on to the sellers but they are the ones competing against the High St shops so that seems fair.

Of course, Amazon's profits should be being fairly taxed as well but that is nothing to do with this proposal. It is the Tories who are being disingenuous by creating a tax they claim is on Amazon but which is really paid by the sellers instead of by their mate Jeff.

[elsergiovolador]

The proposal seems to be to eliminate/reduce rates - paid by High Street retailers - by charging a transaction-based tax on online sellers.

How is it going to happen? Is DST going to be ringfenced and funnelled to councils? I highly doubt that council would want to give up their cash cow. It's also unlikely that any yield of DST would give them the same level of funding. Probably we would end up with business rates staying as is, plus the DST that companies like Amazon will easily avoid paying and it will be another burden on small business who sells online and can't afford to pay business rates. Which actually helps big corporations, in the sense that it removes competition.

[Dave314159ggggdffsdds]

"Amazon's profits should be being fairly taxed"

And they are. That's the real problem: they don't make big profits, and the far right has successfully established the idea it's some kind of conspiracy. Amazon is set up to do exactly what the tax system intended to encourage. There is no 'tax avoidance', just a very low margin business.

[elsergiovolador]

they don't make big profits

I assume that you are trolling, but it's worth addressing that companies like Amazon are in control of declaring profits. The profits they declare have nothing to do with actual profits and that's the problem.

[veti]

Gee, that sounds bad. Maybe we should make them have their accounts audited from time to time.

[Dave314159ggggdffsdds]

"companies like Amazon are in control of declaring profits. The profits they declare have nothing to do with actual profits and that's the problem."

This is the far-right conspiracy theory in play here. It is a ludicrous piece of nonsense, on the face of it, and a nasty piece of propaganda when looked into.

What you're saying isn't just provably wrong, it's full-on far right.

[jdiebdhidbsusbvwbsidnsoskebid]

Far right?!?

"What you're saying isn't just provably wrong, it's full-on far right."

It's not far right at all for flip's sake. It's just stating that what most people would call "profit" can be represented on a company balance sheet as something else, and therefore not taxable. It's not illegal, it's allowed within the taxation framework. Whether or not it should be allowed is up for debate.

For example, a company can reinvest "profit" back into the business and not pay tax on that reinvested "profit". An individual person can't do that. You can't take a regular PAYE salary, reinvest it in, say a new car or a house extension and thus not pay tax on it.

[EricB123]

Same Old Shi*

"There is no 'tax avoidance', just a very low margin business"

Thanks for your analysis of the situation Mr Jeff B

[Loyal Commenter]

Amazon doesn't make massive profits, and Jeff Bezos doesn't have a fucking space rocket from (checks notes) profits from Amazon?

[Robert Grant]

Correct. It's not from profits from Amazon.

[veti]

All taxes on business are ultimately paid by the business's customers. I don't see what makes one version of this any more disingenuous than another.

[Peter D]

There is an easy way round this

The UK is Amazon's second largest market outside North America after Germany. It is expected on current growth trends to become the largest in two to three years. Simply make it a criminal offence to buy or sell through Amazon and refuse to repeal the law until they pay a fair amount of tax.

[sabroni]

Re: until they pay a fair amount of tax.

The system needs to tax them a fair amount. Until that's defined your extortion plan is a non-starter.

The other thing you could do, if you really want to make a difference to Amazon decimating the high street, is get off your arse and go to the shops.

[veti]

Re: until they pay a fair amount of tax.

Make sure delivery drivers are entitled to employee benefits, and are paid a fair wage.

Require drones to carry owner identification and third-party insurance.

Make shippers financially responsible for disposal of their own packaging.

Basically, make sure Amazon is paying for its externalities.

[TheMeerkat]

Re: until they pay a fair amount of tax.

As HGV drivers are now starting getting fair wage, the same will be happening with local delivery drivers too - if we don’t start importing cheap labour again as large companies would like us to do.

[elsergiovolador]

Re: until they pay a fair amount of tax.

The problem is that this profession has become a dead end. You can't start your own company doing deliveries, because all clients want to work in-scope of IR35 to avoid potential HMRC investigation.

So you end up paying tax on revenue, not being able to deduct any business costs = can't run business.

There are of course people who don't mind working for someone else, and they are surely the winners in this, but we have pulled up the drawbridge and we are unlikely going to see new competition to the already established companies. No competition is never good for the consumer.

[HelpfulJohn]

Re: until they pay a fair amount of tax.

"The other thing you could do, if you really want to make a difference to Amazon decimating the high street, is get off your arse and go to the shops."

I did my bit!

I got up off of my arse, went in to Town, got slightly rained on, bought some shopping, petted some Guide-Dogs-For-The-Blind whose attached humans were begging for funds, gave them some funds [which I thought was only fair as they let me play with the doggies], used a bus both ways and did not use one, single online service during the entire trip.

Oh, I also had a bacon sarnie and coffee in a nice shop thing. Yet another local establishment aided by my heroic exertions.

I haven't spent anything Amazonny at any time in this year, I don't think.

Imagine, me, a superhero, defending the off-line businesses!

Aren't I just *wonderful*?

[jake]

Re: until they pay a fair amount of tax.

I have never, not once, purchased anything online. I much prefer to help keep the locals gainfully employed, rather than increase the size of the purses of the billion-dollar multi-national advertising companies.

This has not affected my lifestyle even a little tiny bit when compared to the neighbors.

Strangely, people like sabroni don't call me a superhero. They call me a neo-luddite.

I'm cool with that :-)

[Dave314159ggggdffsdds]

Re: There is an easy way round this

They already pay a fair amount of tax. Exactly what the system intends. The idea they don't is far right propaganda. The main pusher of the idea is a chap called Richard Murphy, who self describes as a 'new Nazi' - he thinks the term 'neo-nazi' is tainted...

[Peter D]

Re: There is an easy way round this

I've got 9 thumbs up and 9 thumbs down which makes my plan middle of the road. With these corporations we cannot allow them to pay what is strictly within the law. Make them unable to earn any cash until there is a general sense that they pay a fair amount of tax. They already have advantages of scale but they shouldn't have advantages of international tax manipulation. Let them face the choice between not doing business here or paying a similar proportion of tax as companies without their lawyers who also do business here.

[jake]

Re: There is an easy way round this

"I've got 9 thumbs up and 9 thumbs down which makes my plan middle of the road."

No, those thumbs only mean that 9 people chose, for reasons unknown, to give you a thumbs up, and 9 people chose, for some other reasons unknown, to give you a thumbs down. Even the troll and sabroni don't actually mention if they added a thumb or not, much less which way it was pointed.

So essentially, those thumbs mean precisely nothing because their providers haven't bothered to tell you what they mean in this particular context.

Worse, all those thumbs connected to your name, in aggregate, mean even less. As data, thumbs in this forum are noise, at best.

[jdiebdhidbsusbvwbsidnsoskebid]

Re: There is an easy way round this

Totally agree with you. And I gave you a thumbs down just to prove your point.

[elsergiovolador]

Re: There is an easy way round this

If we had a progressive tax in the same vein as for the workers, then currently smallest businesses pay tax on revenue, that effectively hits 50% rate in the IT sector.

I think Amazon and other big corporations should get the same treatment as the small guy - 50% revenue tax is something I would support.

They had £20.63bn of revenue in 2020, so they should pay ~£10bn of tax rather than meagre £4m.

[Dave314159ggggdffsdds]

Re: There is an easy way round this

"They had £20.63bn of revenue in 2020, so they should pay ~£10bn of tax rather than meagre £4m."

So you want all low margin businesses shut down? No more supermarkets either? No utilities companies. No petrol stations. No anything, except administration and service jobs?

Or is it just something about Amazon in particular?

We don't charge taxes on revenue, but on profit. Because we're capable of thinking.

[Disgusted Of Tunbridge Wells]

Re: There is an easy way round this

DaveNumbers, if you can make such an obvious and sensible point like that, why do you fill the rest of your posts with complete bollocks?

[jdiebdhidbsusbvwbsidnsoskebid]

Re: There is an easy way round this

There's something about that plan I like. After all, I have to pay tax on my salary, which is my income. I'm not allowed to only pay tax on the amout of cash I have left at the end of the month, which is my profit.

Can't see it working though.

[veti]

Re: There is an easy way round this

And businesses do pay tax on their revenues. in the UK it's called VAT, other countries have different systems and names but they all have some version of it.

[EricB123]

Re: There is an easy way round this

I've come to the conclusion that if you are worried about getting downvotes then you are probably a part of the problem.

Sort of like some governments of several large countries that I won't or need to mention.

[Peter D]

Re: There is an easy way round this

I wear my downvotes as a badge of honour.

[Dave314159ggggdffsdds]

Re: There is an easy way round this

I can't say I see downvotes from actual outright Holocaust deniers as anything but that. These are some vile people, as they're mostly happy to make clear.

[Loyal Commenter]

Re: There is an easy way round this

I'm not sure how you managed to turn wanting to claw back some of the profits made by the world's richest man into holocaust denial, but I'll have some of what you're smoking.

[jake]

Re: There is an easy way round this

I usually don't usually see my downvotes ... or upvotes. Ad blockers don't just block ads, they block all kinds of inconsequential noise.

[J.G.Harston]

Re: There is an easy way round this

Define "fair amount".

[Disgusted Of Tunbridge Wells]

The point of business rates is to tax valuable land use.

So if you have a warehouse at the edge of a northern town despatching your orders, you'll pay little business rates.

If you have a shop on a busy high street, you'll pay lots of business rates.

It's fine to disagree with that goal, although why you would I don't know, but it seems those that do either don't understand or pretend not to understand why it exists in the first place.

[elsergiovolador]

The point of business rates is to tax valuable land use.

No, the point of business rates is to swell the councils' coffers, so they can then use that money for mates contracts and vanity projects. This money largely gets wasted.

[Loyal Commenter]

This money largely gets wasted.

The vast majority of council funding in the UK goes onto local policing, schools, and adult social care.When you get a council tax bill, it will also give you a breakdown of where the money is being spent. Unless you believe that business rates are somehow hypothecated into a bucket marked "backhanders", I'm calling bollocks on that one.

[codejunky]

@Disgusted Of Tunbridge Wells

"but it seems those that do either don't understand or pretend not to understand why it exists in the first place."

Likely both. 'We are from the government and we are here to help'.

[Graham Cobb]

The point of business rates is to tax valuable land use.

No, it isnt.

Why would anyone want to tax land use? The point of business rates is to make sure that businesses in the local area contribute to the cost of local services, just like householders do.

A good goal but undermined, in today's world, by businesses no longer needing a physical presence in the local area to do business there. So, a tax on online business to replace (fully or partially) business rates seems quite logical.

[Dave314159ggggdffsdds]

"The point of business rates is to make sure that businesses in the local area contribute to the cost of local services, just like householders do."

Uhuh, and Tommy Robinson isn't a racist...

That idea is s far right conspiracy theory.

[Loyal Commenter]

This is getting tiresome now. Please define how this is:

a) far right

b) a consipracy

c) theory

If you have to troll people, at least do it intelligently. A fine piece of trolling is a wonder to behold, whilst yours is tedious bullshit.

[Andy The Hat]

Just repeal all the bloody tax laws and replace with a simpler set of new ones without the (deliberate) loopholes. Draughting more taxes or increasing the tax that is being avoided does not make it better, it often makes it easier for matey-millionaire obfuscate their accounts to use loopholes.

If you sell it you pay the tax. If you charge to sell it you pay the tax on the charge. Everyone in the "real world" does this are are beaten with an HMRC stick when they don't, why can't the mega internet corporations be treated the same? I think I want to by a nice new broom from Amazon and use it across Government finance controllers ...

[Dave314159ggggdffsdds]

It's depressing to see people like you swallow the far right's propaganda. What a load of neo nonsense.

[babaganoush]

Is neo nonsense opposed to retro nonsense. And if so how would you classify your nonsense?

[Sykowasp]

An International Corporation Tax is just not going to happen anytime soon.

So when we are back in the real world, and looking at things from a consumer and societal point of view...

""However, our fear is that the large companies would simply pass this extra tax on to the suppliers and smaller companies that trade on the platforms, and thus avoid paying any extra tax and avoiding reduced profits.""

Well, Amazon avoid it, but the tax is paid somewhere into the government and the cost structures and more equalised between high street and internet.

Right? ... right?

OTOH Amazon deliver in electric vans, one journey, hundreds of houses. Better than hundreds of journeys to the shops in fossil-fuel cars, so the carbon cost saving of internet shopping should also be a factor?

etc

etc

[Dave314159ggggdffsdds]

Given it is still trying to get the antisemites and far right conspiracy nutjobs out if the party, Labour would do well to steer clear of this particular load of nonsense.

[Loyal Commenter]

Interesting. Has anyone told the Tory party that Labour have been stealing their members?

[Dave314159ggggdffsdds]

It wasn't the Tories, or they might have won an election. It is provably true that Corbyn-supporters included the ex-BNP membership - the names and addresses are the same.

[G R Goslin]

It's really just begging the question.

ALL taxes are paid by the unfortunate individual at the end of the line. All stages on the route to this individual simply add their notional tax onto the price of the goods or service. There is no exception to this principal. If there was, it would simply be a case of the supplier paying the tax out of his own pocket, with no redress, and that is not going to happen. And as Samuel Clemens (Mark Twain), observed, so long ago, "Taxes are not levied for the benefit of the taxed". Nothing has changed since then. Or will.

[Graham Cobb]

Re: It's really just begging the question.

No, it isn't as simple as that.

In most markets, customers won't pay more than the value they perceive themselves to get. If they are paying exactly that amount already, then a tax will not change what customers will pay but will either prevent reaching a deal (the transaction doesn't happen) or the supplier takes a hit.

Now, in most cases, customers are currently paying less than the value they perceive themselves to get, due to the effects of competition. In that case, the new tax (assuming it applies equally to all the competitors) will increase what the customer pays. But it won't increase it above the value the customer perceives they get.

So, the impact of a tax on prices depends on competition. Ironically, perhaps, in a very competitive market the tax increase raises prices. But in a non-competitive market prices are already as high as they can go so the tax is paid by the seller and reduces their profits.

[jake]

Re: It's really just begging the question.

"But in a non-competitive market prices are already as high as they can go so the tax is paid by the seller and reduces their profits."

Or, more likely by far, the seller stops making that particular product, either temporarily or permanently, and shifts those resources to another, more productive, product line. The shareholders demand it.

[G R Goslin]

Re: It's really just begging the question.

No, it really is as simple as that. Where, pray, do you think the seller gets the cash to pay the tax? Does he send his wife and children out to work, to raise the money to pay the taxman? or sell off his assets, his car, the house, his wife and children, to the same end. No. It all comes from the price charged to the buyer. The seller might consider it an unwanted claim on his profits, like shoplifting, but the money, ultimately, comes from the customer. All of it. Without exception.

[Graham Cobb]

Re: It's really just begging the question.

Of course. And where do you think the customer gets the cash to pay for goods? They get it from their employer, or they get it from reducing spending on other things, or from savings - in other words, they get it from economic activity.

The point is, that in some markets (in other words, for some goods, at some times) prices may rise, and in others they may not. All I am saying is that it isn't as simple as the consumer loses out - other players (such as shareholders) lose out in some cases, and the government lose out in others (like people stop doing the activity altogether because the tax is so high). Consumers don't just pay any price asked - they assess it against the value they receive and against other calls on their money.

[Robert Grant]

> High street businesses pay over a third of business rates, despite making up only 15 per cent of our overall economy

Probably because they don't have the economies of scale for their physical premises that companies with digital shop fronts do.

[jake]

"Probably because they don't have the economies of scale for their physical premises that companies with digital shop fronts do."

Note that there is absolutely nothing stopping them from opening a digital storefront alongside their brick and mortar store.

[Loyal Commenter]

Absolutely this.

The fact that a lot of high-street chains seem to have abysmal, or no, offerings in the online world is a sign that they are failing to move with the times. This, along with private equity asset stripping, is their death knell, and the real reason that a bunch of them have gone to the wall in recent years. The pandemic just helped them on their way.

I mean, do you know anyone who has actually gone into Debenhams and bought anything in the last 10 years? Why bother going into town, and either paying to park, or getting the bus, then carrying home bags of shopping, when a few clicks of the mouse, or a swipe on your phone when you're sat on the throne, and those goods are with you the next day.

Shops that sell things that you need immediately, or that don't fare well being thrown around by A. N. Other Courier Ltd., or have a short shelf life, or need to be inspected / tried on before buying are faring well. My local shopping street still has greengrocers, butchers, etc. other businesses need to move with the times.

Understandably, some people need, or want, to go into a physical shop so there is still a market for them, but the footfall is lower, and the business rates (along with high rents) are one of the things that makes them uncompetitive.

[Loyal Commenter]

"However, our fear is that the large companies would simply pass this extra tax on to the suppliers and smaller companies that trade on the platforms, and thus avoid paying any extra tax and avoiding reduced profits"

Which would, presumably, lead to those companies that trade through Amazon not trading through Amazon. As sole traders, surely they wouldn't pay them, along with a share of profits to Amazon, and would be able to compete. As it is, smaller traders are pretty much forced to sell via Amazon because otherwise they get outcompeted. If they all decided that they were better off not selling via Amazon, then this price hike would affect Amazon's own products, and reduce their competitiveness through economy of scale. I don't see how this would be a bad thing for anyone except Bezos. What am I missing?

[Boris the Cockroach]

why dont they

just make it illegal to divert profits.

If you use the 'IP bought in from the cayman islands' trick , and the cost of that strangely matches the amount of profit you made here, then HMCR can say "Is that IP freely available to everyone at that price?" if the answer is 'no' then thats profit diverting and we tax you on the turnover of your UK operation (which is more than the corpation tax you would have paid)

Sadly that would mean the torys having to grow a set of bollocks and standing up to the big multi-nationals who do this... which would ruin their chances of a nice fat directorship/consultancy when they get booted out.

Oh and small/medium UK based business owners hate the companies who can profit shift, as they cannot do this to reduce their tax bill

[Dave314159ggggdffsdds]

Re: why dont they

"If you use the 'IP bought in from the cayman islands' trick , and the cost of that strangely matches the amount of profit you made here, then HMCR can say "Is that IP freely available to everyone at that price?" "

That's exactly how it works. The 'trick' isn't real. It's far-right conspiracy theory nonsense.

[Robert Grant]

Re: why dont they

Yeah IP licencing is a good trick, but quite often IP is licenced to certain parties and not others. You're suggesting a pretty big change here, that IP is available to all if it's available to any.

[jdiebdhidbsusbvwbsidnsoskebid]

Missed the point of taxes?

"Labour has proposed a significant increase in the Digital Services Tax, and if all this extra tax was paid, it would allow the removal of business rates"

The point of this tax shouldn't be to subsidise another tax, the nation's broke and stuff needs to be paid for: schools, transport, bin collections, emergency services, hospitals, you name it. This is what taxes are for in the UK we don't currently collect enough to pay for everything we want.

Maybe we should ensure that everyone pays their due tax in the first place? The UK tax system is too complex, allowing too many loopholes to be found by those with deep enough pockets to afford the cleverest accountants in the first place. Radically simplify the tax rules and you can reduce number of ways round paying. I suspect it probably isn't that simple though, sadly.

[Robert Grant]

Re: Missed the point of taxes?

> Maybe we should ensure that everyone pays their due tax in the first place? The UK tax system is too complex, allowing too many loopholes to be found by those with deep enough pockets to afford the cleverest accountants in the first place. Radically simplify the tax rules and you can reduce number of ways round paying. I suspect it probably isn't that simple though, sadly.

Pretty much everyone does pay their due tax; that's what's defined in the tax code, unless they're evading tax (a criminal offence). Simplifying is not the key, I think. The key is adding more complexity to cover more cases.

I'm not saying it sounds great, but if you want to legally enforce taking money from businesses, you need to cover a lot of edge cases to avoid just killing the economy, your cash cow.

[Cliffwilliams44]

I amazes me when these IDIOT politician show their complete ignorance of how taxes are dealt with inside ANY business! They are passed on the customer. Does she not think that brick-n-mortar business are passing on that cost? We heard the same ignorance from the press secretary (the SACK!) here in the US that American corporations "should not" pass on the tax increases to their customer, as that is somehow "unfair", they should just absorb the cost! Really? why don't all you Leftist voluntarily donate half your after tax income to the government, I am sure you would not think THAT is fair!

Legally using the tax laws to reduce the amount you owe in taxes IS NOT ILLEGAL OR IMMORAL!

Corporations pay taxes, their shareholders pay taxes, their employees pay taxes, but what can corporation not do? VOTE! So corporation are taxed without representation! What do 50% of the population of the US NOT do? Pay taxes! What can they do? VOTE! And in the twisted minds of the Leftists, this is FAIR!

[Loyal Commenter]

Has it not occurred to you that Amazon might be doing so well because it doesn't have those taxes to pass onto the customer, so it can undercut businesses that do? If they then have to charge the customer more, in order to make a profit, the customer is free to go elsewhere, assuming that "elsewhere" hasn't yet been driven out of business by Amazon's predatory business practices.